Planning for Growth: Developing an Exit Plan

This report discusses the growth opportunities for SMEs, with Dark Arts Coffee as a case study. It covers evaluating growth opportunities, funding sources, business plan, and exit options. The report uses various frameworks such as Ansoff's growth vector matrix, SWOT, VRIO, PESTLE to evaluate the strengths and opportunities for growth. It also provides expert advice on growth strategies and funding sources.

Planning for growth

Table of Contents
INTRODUCTION...........................................................................................................................4
TASK 1............................................................................................................................................4
P1. Main considerations for evaluating the opportunities for growth....................................4
P2. Application of Ansoff's growth vector matrix.................................................................7
M1. Options for growth using a range of frameworks...........................................................8
D1. Critically evaluate the particular options for growth.......................................................9
TASK 2............................................................................................................................................9
P3. Sources of funding...........................................................................................................9
M2. Evaluate the sources of funding and provide advice on the suggested option..............10
D2 Critique the potential sources of funding with justified argument.................................11
TASK 3..........................................................................................................................................11
P4. The business plan for growth.........................................................................................11
M3. Produce a suitable and detailed business plan..............................................................16
D3. Demonstrate a coherent and in-depth business plan......................................................17
TASK 4..........................................................................................................................................17
P5. Exit and succession options............................................................................................17
M4. Evaluate the options of exit and succession..................................................................18
D4. Give critical evaluation of the exit and succession options...........................................19
CONCLUSION..............................................................................................................................19
REFERNCES:................................................................................................................................20
Books and Journals:..............................................................................................................20

INTRODUCTION
Small and medium organisations are an essential part of the development of most of the
economies. SMEs address for the majority of corporate entities around the world and are
fundamental contributors to employment development and global economic development. As the
business environment is dynamic in nature, it becomes essential for the SMEs to make relevant
plans and strategies in order to effectively attain the business goals. Moreover, the local
governments take necessary actions and measures to support and help in the growth of SME
(Valenzuela-Venegas, Vera-Hofmann and Díaz-Alvarado, 2020). The small medium company
which is considered to complete this report is Dark Arts Coffee. It is a London based SME which
is known for its delighted coffee. The current report is based on the explanation on several
growth opportunities that are exist in market. There is a discussion on various frameworks such
as Anosff's growth matrix, SWOT, VRIO, PESTLE to evaluate the strengths and opportunities
for growth. Later, it outlines the various sources of funding present to small medium company.
The business plan covers financial information and strategic goals for the business growth.
Lastly, it delineates the exit and succession options for SMEs.
TASK 1
P1. Main considerations for evaluating the opportunities for growth.
Identifying the growth opportunities is very fundamental for any kind of organisation. In
order to plan for growth and expansion, the Dark Arts Coffee requires to do a proper research
and evaluation about the target market so that they grab the benefits of first mover. For better
planning for growth, it is essential to consider various points that comes along the way while
analysing opportunities for growth.
Competitive advantage can be understood as the factors that allows an organisation to
make their services and commodities better and serve them with reasonable prices that its
competition. It lets a company to create more sales and greater margins compared to its
competition (Holz-Rau and Scheiner, 2019). In case of Dark Arts Coffee, these benefits could be
access to natural resources, highly skilled labour, ability to produce goods at the lowest cost,
brand image recognition and many more.
VRIO analysis-
Valuable:

 Special tastes, flavours and quality of coffee is a valuable resources.
 Customer service is a valuable resources that complements the quality of Dark Arts
Coffee and supports in retaining customer for a longer period of time.
 Cafe environment is highly valuable resources that supports good quality raw ingredients
and retain the quality of coffee.
Rare:
 Special flavours and quality are rare resources as the company makes a fundamental
investment goes into procurement and then generate new and exited flavours.
 Customer services is not rare resources as it can be attained by its competitors as well
(Syssner, 2020).
 Store environment is not rare as other companies also maintaining a healthy environment
by indulging training to staff members and certain attention.
Inimitable:
 Special flavours and quality of coffee is hard to imitate.
 Customer services is slightly hard to imitate.
 Store environment is hard to imitate.
Organised:
 Special flavours and quality of coffee is organised as these are essential part of the brand
marketing and customer retention tactics.
 Customer services is organised through which customer remains loyal and retained.
 Store environment is organised as it delivers positivity and relaxation the customers.
Porter’s generic matrix-
With the help of this matrix, an organisation can analyse its competitive position in its
target market. For Dark Arts Coffee, it must follow the strategy that would support them to
accomplish growth and success. The following is the discussion on various strategies through
which the chosen small-medium company can use to attain success-
 Cost leadership: With the help of this growth strategy, the company can limit its costs to
become a market leader (Ferm and Raco, 2020). In case of Dark Arts Coffee, with this
strategy they make a healthy relations with their customers and attain benefits over key
players in the marketplace. Therefore, cost leadership tactic helps in attracting more
customers.

 Differentiation: Through this strategy, the firm can create and innovate their products
and services which has some new features that represents uniqueness. It supports in
gaining advantages over the established players.
 Focus: With the help of this strategy, the company boosts its focus and focus on the
certain market. In case of Dark Arts Coffee, the organisation pay attention either on
attaining leadership in niche marketplace or to serve them unique product.
SWOT analysis-
Strengths Weaknesses Opportunities Threats

 The company
includes highly
motivated staff
in the business
which serves
fast services to
customers.
 The company
has clear rules
of work where
everyone
knows the
functionality of
the
organisation.
 It has a strong
and positive
brand image
that offers
quality services
and items at
the coffee
shop.
 It has
limitation to
acquire a
market share.
 The coffee
industry is
highly
competitive
where new
entrants can
easily enter the
market and the
company will
have no choice
but to share the
profit with
such
businesses.
 The company
is heavily rely
on the
distribution of
suppliers.
 The company
can try
innovative
techniques to
boost its
business
performance.
 The brand can
also deliver
rewards and
exciting prizes
that would
support to
create a better
customer
experience.
 As the vendors
know that the
company is
dependent on
their support,
there is a
chance to raise
the costs of raw
materials.
Pestle analysis-
 Political factor: It is found that the political condition of UK is quite stable which offers
several growth opportunities for the business. But, due to Brexit, it has imposed various
new rules and trade restrictions which affect the growth of business.
 Economic factor: It is seen that UK population is well-educated and skilled which offers
a benefit to the company that they can higher qualified people for their business.
 Social factor: Coffee is liked and preferred by almost every age group throughout the
world. The Dark Arts Coffee serves a range of tastes and flavours to the consumers which

influence the business sales in positive terms (van der Wouden, 2020). On the other side,
people are becoming more health conscious and tends to avoid sugar intake in their diet
which is a threat for the company.
 Technological factor: UK is one of those countries where the technological
advancement is increasing day by day. The chosen business can grab these opportunities
of innovation in their business. It helps to ease the process of serving coffee and other
menu items.
 Legal factor: There are several legislation and laws imposed by the government such as
minimum wage rates, age or gender discrimination law and many more. The company
must compelled all the laws and rules that creates a smooth flow of business.
 Environment factor: The company can recycle their disposed items in order to protect
the nature and environment. It is also important to take this concern seriously due to the
increasing awareness of customers regarding environment safety.
P2. Application of Ansoff's growth vector matrix.
The Ansoff Matrix is used by organisations to understand and plan their tactics for
significant growth. This matrix is covered with four strategies that can be utilised by Dark Arts
Coffee to support growth and also knows the risks covered with each strategy. The discussion is
further:
 Market Penetration: Through this strategy, the organisation mainly focuses on its
offering in the same marketplace. It helps in making business sales and fulfilling the
demand of customers. In case of Dark Arts Coffee, the company mainly focuses on the its
promotional tools and distribution activities to increase its market shares. The biggest
benefit relates to this strategy is to attain competitive benefits. It will also help the
company to discourage competitors from entering into the marketplace. While, sales are
increasing due to the low costs on goods. The drawback is that keeping low prices also
limits the margins of profits. It may create pricing wars.
 Market development: With this strategy, the organisation enters a new market with its
current goods and services. It is seen that this strategy is most successful if the
prospective customers are lucrative in the new market. It is beneficial to boost the
product sales as it tends to attract new customers from new market (Feria Toribio and
Santiago Ramos, 2019). It also consists less risk. The drawback is that the sometimes

customers do not indulge benefits that they were getting in last target market. It requires
high capital investment to expand share of market.
 Product Development: Through this strategy, the firm creates a new product or innovate
the existing ones to cater services and goods to its current market. It is adopted by firms
when they are acquiring good volume sales from its target market. They create or
innovate the products so that consumers of brand do not feel boredom by their services.
In case of Dark Arts Coffee, the company creates a new product by investing into a
proper research and development so as to add new features to the existing goods and
services. The benefit is that it can boost the demand of new product. It also tends to limit
the costs while improving competitiveness. The drawback is that there is a chance that it
might not like by the users which will resulting loss of market share. Also, it is involved
with high risks.
 Diversification: The organisation enters a new market with a completely new product or
service. It involves higher risks as both product and market development are needed. The
pro side is that the organisation is able to generate enhanced profits. It limits the risk of
loss of overall portfolio. The problem is that the organisation may face numerous
uncertainties and risks while they capture new market with new products. It needs high
skill sets to diversify properly.
After analysing all the strategies Dark Arts Coffee is able to grab the opportunities that
are exist in the place of market. Hence, the recommended strategy is the diversification strategy
in order to increase its market share and to acquire new users of products. Although, it associates
with higher risk factors but it also offers greater opportunities and profit margins to the company.
M1. Options for growth using a range of frameworks.
It is analysed that organisations need to use appropriate growth options which can be
possible with the help of using the Ansoff growth vector matrix. It is very important for an
organisation to evaluate each option in this Matrix so that they can select the best one for gaining
a competitive advantage in the market. It included four types of strategies such as market
development, product development, market penetration and diversification. For the small
business of Dark Arts Coffee, diversification strategy is suggested as it helps in gaining new
customers with new offerings. With the help of right talent, the company can identify the needs
of the particular market then serve accordingly.

D1. Critically evaluate the particular options for growth.
It is analysed that organisations need to understand all the available options in the market
so that they can achieve their goals and objectives effectively. When a company is doing
planning for growth then it becomes more important to evaluate each option which they
considered (Im and Kwon, 2019). After evaluation, it is very important to find out the deviations
if any occurred and then make a mitigation plan.
TASK 2
P3. Sources of funding.
Funds plays the most essential role to conduct a business in a smooth manner.
Organisations such as Dark Arts Coffee look for the ways of funding that helps business to grow
and develop. The different sources of funding that are available to the Darks Arts Coffee are as
follows-
 Retained earning: It is the way in which many organisation aims to increase its profit
margins by selling a good or services or supplying a service for a greater price than what
it costs them to make the products. This earning can be allocated to its shareholders in
terms of dividends, or the organisation can limit the number of shares outstanding by
beginning a stock buyback campaign.
Merit Demerit
 It indulges funds for research and
development.
 It helps in increasing business liquidity.
 It is not the most preferable choice
among shareholders as they want
higher dividends rather then seeing
money reinvesting.
 Personal investments: Personal investment accounts come in different forms such as
self-directed online brokerage account or individual account. In order to start a business,
the individual can be the first investor of himself. Either with the own cash or with
collateral on own properties and assets. It proves to bankers and investors that an
individual have commitments for longer period of time to the projects.
Merit Demerit

 It facilitates the goodness of managing
personal investment account is having
control of activities and cash flow.
 It leaves individual without the support
of professional advisor who can assist
in reaching financial objectives.
 Bank loan: Bank loan is a source of funding which is taken from banks and in return, the
borrower have to indulge collateral securities. Also, the rate of interests is pre decided
that has to be given to the borrower and pay on equal interval of time (Reece, 2020).
There is an initiative under which all the paper formalities are completed.
Merit Demerit
 It can be named as a secure source of
finance.
 The borrower has to pay the amount of
interests on regular period of time.
They have the pay the interest rate even
the business is suffering from losses.
After analysing all the methods of sourcing finance for the business, the recommended
option is Bank Loan which is safe and secure way of generating funds by the bank. Dark Arts
Coffee only have to pay fixed amount of interest rates on timely basis.
M2. Evaluate the sources of funding and provide advice on the suggested option.
Funds are found to be most important as without funding it is not possible for an
organisation to plan for growth (Gumel, 2019). Funding is required for the purpose of investing
in any investments. In a growth plan, funding becomes more important as it requires investing
and that's why a company need to identify the best source of funding. It can be crowd funding,
bank loan, peer to peer loans and share capital. Bank loan is seen as the most appropriate source
of generating funds for the Dark Arts Coffee. It is secure and safe as it will done in a legal paper
work procedure which is mentioned with clear terms and conditions. The company will have to
pay a fix amount of interests only.
D2 Critique the potential sources of funding with justified argument.
After finding sources of funds, it becomes organisation to evaluate each formed option so
that they can select the best suitable option. The company needs to understand the pros and cons

of each option which helps them to select the best one. In this process, the company needs to
make sure that the option should have minimal risk.
TASK 3
P4. The business plan for growth.
Executive summary: The business plan is formulated for Dark Arts Coffee. It is small coffee
shop in United Kingdom who wants to grow their business significantly.
Vision: To enhance the lives of people by delighted taste of coffee.
Mission: To cater the customers the best freshly roasted coffees with unforgettable services at a
low price.
The key aims are as follows:
 To boost the product size.
 To make a brand which is liked by customers across Europe.
 To rise the business sales by 7 percent in next months.
Overview about the brand: It is small-medium organisation in Homerton, London. The
company established in 2014. It is mainly known for its delighted and tasteful roasted coffee.
They offer products and services at very reasonable prices in order to attract more customers
who can spend their quality time in cafe while enjoying the coffee (Konvitz, 2020). The serve
various services such as good music and relax-able decorum. It caters plenty of vegan options for
the customers. They indulge quality of coffee. The long term goal is to set a business by
expanding business in several parts of the world.
SWOT analysis:
Strengths Weaknesses Opportunities Threats
The business is known
for its quality coffee.
Its marketing tools and
techniques which are
unable to
communicate about
the brand.
The demand for coffee
is rising.
Established key plays
such as Dimello
Coffee House or Foxes
Cafe Lounge.
Market analysis:

 Segmentation: The firm can use different ways to segment their customers on the basis
demographic factors or geographical factors.
 Targeting: The target customers are young and college students.
 Positioning: They have positive image of catering quality services.
The coffee shop works to cater the services to target the customers and generate profits.
Knowing the key competitors helps company to formulate plans that benefits the company. The
reasonable price factor helps to gain enhanced customer base. Innovation takes place in the firm
to cater new flavours and tastes of coffee (Herzog. 2019).
Marketing and Sales strategies:
 Marketing strategies: Social media channels, radio marketing can be used by firm.
 Source of revenue: It generates revenue by selling roasted coffee.
 Sales strategy: Online services, offline services, take away, home delivery.
 Pricing strategy: Penetration pricing indulges enhanced customer base.
 Marketing and communication strategy: Digital marketing will support in attracting
customers.
Research and development:
 Technological roadmap: Trends can be assessed by using technological roadmap.
 R&D: This area helps business to know about the market trends.
 Technical partners: Social media platforms such as LinkedIn, Facebook.
 Trade market: It is used to protect the business idea and goods.
Staffing and operations: It is found that employees are the asset of Dark Arts Coffee as it helps
to raise the productivity of business.
 Organisational structure: Divisional structure is used by company.
 Staffing and training plan: HR department is responsible for the people hired in the
business. This department makes employees capable enough to meet the requirements of
customers and business as well.
 Operations: The key role is to cater tasteful coffee to consumers and fulfil their
necessities and wants.
Financial projections: Budget is crucial factor for an effective business plan. Dark Arts Coffee
can function its work on the given budget by finance department. The budget is shown
underneath:

Key Assumptions:
 Coffee is the only source of revenue.
 Employees will be hired if there is a requirement of more employees.
 Thirty days are decided to pay off the suppliers (Anoona and Katpatal, 2020).
Profit and loss: This represents the net income and loss by the Dark Arts Coffee.

Balance Sheet: The following is the screenshot of financial statement which shows assets and
liabilities of Dark Arts Coffee.

Cash Flow: The inflow and outflow of cash is done through investing, operating and financial
activities. It is shown below:

Sales Pipeline:
Funding requirements: Bank loan can be exploited by Dark Arts Coffee as it is secure method
of sourcing funds. A certain amount of interest rate is paid by the company and on regular basis.
M3. Produce a suitable and detailed business plan.
It is analysed that when the company is planning for growth then it becomes crucial for
them to develop a business plan (Nikolopoulos and et.al., 2021). In this process, the company
needs to involve strategic objectives as then only the company is able to achieve the desired
goals and objectives (Wang and et.al., 2022). Without a strategic objective, it is not possible for a
company to make a business plan.

D3. Demonstrate a coherent and in-depth business plan.
The company needs to understand that a business plan should involve all the important
activities and tools which help them to achieve the objective. It should be involved strategic
objectives, market audit and target market (Bice and et.al., 2020). The company can also use
segmentation, targeting and positioning approaches. This approach is really helpful in order to
identify the target market.
TASK 4
P5. Exit and succession options.
A business exit strategy can be understood as the plan for what will fall out when one
want to exit or success the business. Exit plans support business owners have an out if they want
to close or sell the firm. Business owner of Dark Arts Coffee must create an exit plan before
starting a new firm and tweak it as the organisation develop and the market changes. The
following is the discussion of exit or succession plans or strategies:
Merger and acquisition: With a merger or acquisition exit strategy of business, the firm
is either acquired by or merges with, an organisation with aligned objectives to the business. This
method could be flexible in respect of engagement or the freedom to walk away. The main cause
behind M&A is that two individual organisations mutually develop value compared to being on
an separate stands (Bertilsson and et.al., 2019).
Pros:
 The business owner will be able to have a clean break from the organisation.
 The business owner can negotiates the prices, terms and other details of the merger and
acquisition.
Cons:
 It can be time-consuming process and even costly too.
 It limits the job opportunities.
Management or employee buyout: It is an another method through which one can exit
with their business. There are chances they employees who already work in the organisation may
want to purchase the firm from owner. As these people know the owner in a better way and
understand how to manage the firm (Bruton, 2021). This exit strategy could result in fluent
transition and boost loyalty to the legacy of business.

Pros:
 Entrepreneur can hand off the firm to someone who has great experience with the
business.
 The owner still able to make some money off the deals.
Cons:
 There is a chance to face some difficulties in the change implementation which may
deliver the negative influence on the existing clients.
 Difficulties to find an employer who wants to purchase the business.
Selling a business in open market: This is the method that can be exploited by the
organisation to sell their business. Through this method, the business company sell their business
and authorities in the open market and selling cost is decided as per the conditions of market.
The business companies that have set a strong and positive market position are able to get buyers
who want to continue their business.
Pros:
 The owner changes in the business but the business remains continue (Mell, 2019).
 If the business has a positive brand image then they can get a good value in return.
Cons:
 It is a complex process and sometimes it is not easy to find the right buyer for the firm
who can purchase it.
 It requires high legal charges.
From the above options of exit plan or strategy, the best suitable one is Selling the
business in open market through which the Dark Arts Coffee can exit from its business and in
return, gets a good amount of revenue.
M4. Evaluate the options of exit and succession.
It is analysed from the discussion of exit option that there are many situations come in the
life where company need to understand that the need to make a plan for exit (Chen and et.al.,
2020). It looked awkward but it is very important for each organisation to make a plan for exit
and for that purpose they need to evaluate each and every exit option with the help of
comparison. It is recommended that the company need to understand the pros and cons of each
exit option so that they can make the right decisions. Also, by evaluating such exit or succession
options, the company can better know which option they can go for.

D4. Give critical evaluation of the exit and succession options.
It is very important to note that an organisation needs to understand that exit options
should be evaluated so that company is able to exit at right time and at right cost. Otherwise it is
found that if company is not evaluated exit and succession options then they will definitely face
problems (Shamugia, 2020). So, for that purpose, company needs to critically evaluate each exit
as well as succession options.
CONCLUSION
On the basis of above report, it can be concluded that a small-medium organisation is an
essential part of the economic development of any country. These organisations are supported by
government as these helps in creating employment opportunities for the people. In order make a
plan for growth, there are several factors that needs to be considered by the firm. These factors
are analysed with different frameworks and models. In order to make an effective business plan,
the source of fund is the most crucial factor on which entire process is dependent. A business can
exit or succeed with range of options that are discussed in the report.

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